As a result of this, over a quarter (26%) of small business owners are declaring they will have to cease trading if the outlook for their business doesn’t improve by the end of 2023. If this is the case, the current economic climate could lead to the closure of 1.4 million small businesses in the UK alone, a catastrophic blow to the British highstreets, communities, and economy.

The SME Insights Report, published by small business insurance provider Simply Business, found that over half (63%) of SME owners say that rising taxes, interest rates, and inflation are eating into profit margins, with many also grappling with trying to claw back thousands of pounds in unpaid bills.

Late payments emerged as a significant cause for concern for the first time this year, with research showing that British small businesses collectively owed £32.1 billion in late payments from customers.

One in four (23%) SME owners have also been forced to dip into personal savings to keep their business afloat while almost a third (29%) have had to turn to bank loans.

Further questions remain about the long-term effects of the increased cost of energy. Over a quarter (26%) of SMEs are now spending up to 40% more on energy each month compared to the previous year, with some reporting an astonishing 150% increase in their monthly energy expenses.

Over three quarters (78%) of UK small business owners say that sustainability is at the forefront of their business strategy, but their efforts are being hampered by the cost associated with implementing ‘green’ working methods.

Alan Thomas, UK CEO at Simply Business, comments: "The stoic spirit of small business owners is the backbone of the UK economy – their resilience is vital to the nation's recovery and growth. The fact that many SMEs across the UK are struggling so significantly is a serious cause for concern for the British economy and communities.

“Naturally, the impact on consumer purchasing behaviour is trickling through to the books of small business owners at a time when SMEs need our support the most. The reduced levels of cash-flow and liquidity will only make things worse for many. Small businesses sit at the heart of our communities and are vital to our economy, and it is essential that we continue to support them in these times of financial uncertainty.”